New Kids on The Block - How mobile drives international retail growth

Online sales have now reached 17.4% of UK total retail sales, according to the ONS. But the handset is now the growth driver - mobile commerce sales are expected to account for just over 50% of all online retail sales by 2020, according to eMarketer, up from 43.3% in 2017.

From technologies such as visual search to instant price comparisons, smartphones have transformed shopping on a global scale. For retailers with large physical store networks, investing in the likes of location-based services, barcode scanners and push notifications has become essential.

For retailers looking to launch in overseas markets, mobile is a particularly strong opportunity. Many retailers are still lagging in this regard while challenges persist over security, payment and local internet bandwidth in the mobile channel.

But an Internationalisation Retail Index, commissioned by Loqate, a GBG solution to discover how retailers are going global, has shown how four European retailers are blazing a trail.

There are four new kids on the block that are excellent examples of how to utilise mobile platforms for international growth. Germany-based food delivery service Hello Fresh, UK fashion sellers Asos and Boohoo, and online clothing retailer Zalando.

In fact, Asos, Zalando and Boohoo alone generate around 70% of traffic through mobile commerce.

Asos goes global

Two thirds of the retailers ranked in the Internationalisation Retail Index top 30 already have “mid” to “high” mobile capabilities. That means the rest of the pack will have to invest in ongoing development of their own mobile services.

Start with global availability. Like Amazon, Boohoo and Asos each deliver to over 200 markets and territories globally. In fact, Asos and Boohoo deliver to the most territories after Amazon itself.

But doing so naturally requires a foot on the ground. While Asos generated significantly less revenue in its 2016/17 financial year in comparison to traditional retailers such as Dixons, TK Maxx or Tesco, its international appeal is driven by its flexibility and convenient customer journey. Increasingly, retailers looking to expand their global reach are investing in overseas distribution centres to facilitate click-and-collect orders and free returns.

Without its innovative distribution model, Asos, alongside other growing fashion rivals, would not have been able to enter a traditional international retail ranking even five years ago.

Zalando’s convenience

For instance, in 2017, Zalando began opening smaller distribution centres across Europe to complement its large automated hubs in Germany.

Its ultimate aim is to move closer to its customers and provide same day delivery to as many shoppers as possible. For those unable to undertake such large-scale investments, vendors such as Easyship have enabled easier penetration into international markets through seamless fulfilment services.

These consumer-led services cater to the widespread expectation of convenience; a feature of developed and developing markets alike.

Similar benefits are gained through offering free returns or returns to physical stores – indeed, of the top 30 retailers, 25 provided a free returns service in 2017.

HelloFresh invests in success

The rapid ascent of German-based food delivery service HelloFresh since its launch in 2011, now a direct competitor against Amazon after the latter launched its own meal kits service in 2017, has been facilitated by tireless investment in marketing, logistics and people.

Significant innovation has been required to make its novel proposition attractive to modern consumers. Its operations spanned nine different countries and three continents in 2017, while 48% of its turnover was generated in the US in 2016.

Boohoo bets on bolt-ons

Not all growth is organic. For instance, the index’s second-placed retailer Boohoo acquired US retailer Nasty Gal in early 2017, while the ranking leader, Amazon, has invested in and acquired countless businesses to help accelerate its international growth.

However, the foundation of their global appeal is based on convenient, agile and multi-faceted platforms.

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